A Threat From Within

Part one of a series on poverty in Israel; to read part two, click here.

In May, when Israel was invited to join the Organization for Economic Cooperation and Development, a 31-nation club of the world’s most elite, developed economies, Finance Minister Yuval Steinitz called it “a badge of honor.” Indeed, it is.

Acceptance means that Israel can now access sources of capital investment available only to developed countries, but it means something even more rewarding: It’s a legitimization of the tiny country’s economic strength and innovation capacity, reinforcing the image of the scrappy “start-up nation” — where once early Zionists made the barren deserts bloom, now their 21st-century heirs are driving a high-speed technological revolution.

No surprise that the number of millionaires in Israel soared by 43% in just one year, from 2008 to 2009, a rate bested only by Hong Kong and India.

But the “start-up nation” narrative hides another story: Poverty in Israel is more widespread than in any of the other OECD countries, worse than even Turkey and Mexico. Almost one in five Israelis live in poverty, according to OECD guidelines; for children, the rate is nearly one in three.

This economic inequality, among the highest in the world, poses a serious danger to Israeli society beyond that caused by war or terrorism. Poverty in Israel is a direct result of non-employment, the fact that many Israelis will not or cannot work. The two largest segments of citizens outside the labor force are Haredi men, 67% of whom study full-time, helped by government subsidy, and Arab women, 80% of whom are at home, prevented by culture and discrimination from participating in the workforce. A government report issued in July said that Haredi unemployment alone will cost the Israeli economy $1.55 billion in 2010 — 300% higher than the comparable cost in 2000.

And the consequences are not just economic. Those who don’t work generally don’t serve in the Israel Defense Forces, absenting themselves from a fundamental pillar of Israeli life, sowing resentment among the majority and, given the high birth rate among the poor, threatening military capacity in the future. With nearly half of Israeli primary school students either Haredi or Arab, who will defend the country in 20 years?

‘When this country was very poor, we had our act together,” notes Dan Ben-David, an economist and executive director of the Taub Center for Social Policy Studies in Israel, a think tank and research center supported by the American Jewish Joint Distribution Committee. “Now the percentage of families dependent on government is growing all the time.”

“The fundamental problem is that a large and increasing share of the Israeli population is receiving neither the tools nor the conditions to work in a modern community,” he says. “It harms them personally. It harms us nationally.”

It should be noted that while Ben-David’s data are generally accepted, his interpretation has been disputed. Gidi Grinstein, founder and president of the Reut Institute, another nonprofit, nonpartisan think tank in Israel, believes that the Haredi community has awakened to the challenge and is entering the workforce in ever growing numbers.

Nonetheless, among the Haredim this shift is slow and fraught with resistance. Back in June, ultra-Orthodox protests against a high court ruling on a school segregation case nearly shut down Jerusalem for a day, but another ruling issued earlier that week was arguably more important. The court ordered that, by the end of this year, the government stop paying welfare to an estimated 11,000 married yeshiva students who chose study instead of work.

While Haredi political leaders have vowed to restore those cuts, they must be rebuffed; government action is essential to turn around this dangerous trend. The numbers of Haredi unemployed surely would be even higher had not then-finance minister Benjamin Netanyahu instituted cuts in child allowances and yeshiva subsidies in 2003.

But simply cutting off benefits won’t address the root causes of non-employment, and is hardly the right step for a moral society. Israeli Arabs want to work, but are isolated from employment centers and discriminated against by employers; Arab women face the additional hurdle of living in a culture where female autonomy is suppressed. In far too many Haredi communities, full-time learning is prized above economic self-sufficiency — a relatively new phenomenon. Ben-David points out that 30 years ago, the rate of non-employment for Haredim was 21%. Now it is more than three times that amount.

Clearly what’s needed is a committed investment in education and social programs to provide the wherewithal for these significant minorities to integrate into the high-tech economy of Israel’s future. There truly is no time to lose. Ben-David estimates that if present growth rates continue, by 2040, 78% of Israel’s children will be studying in the Haredi or Arab education systems.

And if the fate of worldwide Jewry is tied to the fate of Israel, as we believe, then this stark situation — generally hidden from most Diaspora Jews — must not be ignored or denied. Ben-David has been amassing and analyzing this worrying economic data for years, but only recently put aside his concerns about going public because of the urgency of the message.

“This country is on an unsustainable long-term trajectory,” he warns. “We’re a very young country — if we educate our youth, the sky’s the limit. But we’re quickly reaching the point of no return. This is the only Jewish country we have. This better concern the Jewish people.”

Next week: A closer look at non-employment in the Haredi and Arab communities.

The views and opinions expressed in this article are the author’s own and do not necessarily reflect those of the Forward.

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